September 17, 2013

INFLATION CLIMBS IN INDIA ON FOOD COSTS

[Economists polled by Reuters had expected a headline reading of 5.8 percent, compared with 5.79 percent in July. The main, or headline, inflation rate includes food prices, which are often volatile.]

By REUTERS


NEW DELHI — India’s main inflation rate hit a six-month high in August, driven by a surprise surge in food prices, hardening the case for the central bank’s governor, Raghuram Rajan, to keep interest rates high at his first policy meeting this week.
Food inflation accelerated to a three-year high of 18.18 percent in August, government data released on Monday showed, driving overall inflation to a higher-than-expected 6.1 percent.
Recent government moves to increase fuel prices also drove the jump in the wholesale price index, the price of a representative basket of wholesale goods.
Economists polled by Reuters had expected a headline reading of 5.8 percent, compared with 5.79 percent in July. The main, or headline, inflation rate includes food prices, which are often volatile.
Late planting and disruptions in the supplies of vegetables, including onions, because of heavy summer rains have fueled food inflation. Onion prices jumped 51 percent from July to August.
Monday’s release was the last major data point before Mr. Rajan, a former I.M.F. chief economist, holds his first policy meeting Friday.
“Developments in the currency market suggest that R.B.I. should be in a position to start reversing its tightening measures. However, they have to be careful, as market could interpret it as tolerating higher inflation,” said A. Prasanna, an economist with ICICI Securities Primary Dealership in Mumbai, referring to the central bank, the Reserve Bank of India.
The higher inflation number dampened market expectations that Mr. Rajan would begin to roll back some of the measures put in place by his predecessor in a bid to arrest a sharp decline in the rupee since May.
He has already warned he does not have a “magic wand” to deal with India’s economic crisis, but as he has been dubbed the Guv by a gushing Indian media, hopes are high he can find a formula to stabilize the rupee, calm inflationary pressure and at the same time set off a revival in economic growth.
Before he reveals his monetary stance, Mr. Rajan will first have to deal with the outcome of a pivotal meeting on Tuesday and Wednesday of the U.S. Federal Reserve. The Fed is likely to announce measures to rein in its huge economic stimulus. Fears of an expected policy tapering have already set off an emerging-market sell-off, contributing to the rupee’s fall to a record low.
The Fed is expected to reduce its $85 billion a month bond-buying program, but financial markets are uncertain about the extent of the reduction.

[So what is the problem if Facebook and others have acquired a halo as they try to reach out to developing nations with false notions about what the poor actually want? After all, they do plan to bring the Internet to places that do not have access. But the tech industry’s misreading of the biggest audience in its own revolution will lure it into committing the same mistake of so many other altruistic projects.]
By Manu Joseph
NEW DELHI — THEY can’t do without the farmer story. When people who wish to transform India through the Internet talk about their plans, they tend to tell a story that goes something like this: A poor farmer is about to sell his crop very cheap when someone, often a smart adolescent granddaughter, checks the market price online, and the farmer makes a more informed decision.
It appears that technology executives feel they must treat the Internet as something deeply noble and serious in order to substantiate its importance in an impoverished nation.
Even Facebook, that great time suck of FarmVille, not farmers, seems to have suffered a head injury and is now imagining itself as Mother Teresa. Internet.org, the company’s recent push along with other companies to bring affordable access to the more than two-thirds of the world that is not yet online, has the grave tone of social reformation. Facebook’s founder, Mark Zuckerberg, said last month that the goal was to “create a backbone for many things, including access to information, access to information about health care, education, jobs and just so many good things.”
Too many people presume that what the poor want from the Internet are the crucial necessities of life. In reality, the enchantment of the Internet is that it’s a lot of fun. And fun, even in poor countries, is a profound human need. Quality of life is as much an assortment of happy frivolities as it is the bare essentials of survival. And India is a perpetual reminder that a lot of good — even the somber sociological stuff — can come from people setting out in pursuit of joy.
What the poor want from a technological revolution is probably best understood by watching the way they react to electricity. They do not crave electricity so they can keep newborns warm in incubators. They want it for the simple pleasure.
Chibaukhera, a village in northern India where electricity has been available only since March of this year, is now under the spell of television. As television sets were much sought-after and prestigious dowries, several houses had them even before they got electricity. Now that the TVs and plugs have finally met, the villagers are hooked on Hindi films and serials about family feuds. In time, they will have incubators, too.
It is not always true that entertainment is the collateral consequence of progress; progress, often, is the collateral benefit of the pursuit of pleasure.
So what is the problem if Facebook and others have acquired a halo as they try to reach out to developing nations with false notions about what the poor actually want? After all, they do plan to bring the Internet to places that do not have access. But the tech industry’s misreading of the biggest audience in its own revolution will lure it into committing the same mistake of so many other altruistic projects.
The last 15 years have seen numerous well-intentioned missions to transform society through computers and the Internet — remember One Laptop Per Child? — but few of them have had much impact.
Today, of the roughly 207 million occupied rural homes in India, only about 1.2 million have computers with an Internet connection. But there are 300 million cellphone subscriptions in these areas. And according to a recent survey, more than seven million of those users connect to the Internet only through their phones.
The extraordinary triumph of the cellphone among India’s poor stemmed from its ability to enable a most mundane human need, which is to chat with other people. And when the poor chat, it is not always about curing a child of diarrhea.
The Indian government has several valiant plans to bring Internet access to the villages, but they largely center on connecting government offices for ID databases and for software simulation to teach citizens skills like plumbing. Wouldn’t it be better if the poor were offered direct connectivity over their phones, free or cheap, and were left to decide what they wanted to do with it?
Mr. Zuckerberg’s belief that connectivity is a human right is honorable. Where he and his allies err is in imagining that fun is not, and in underestimating the power of entertainment to transform society. Chatting with friends online may not save the world, but if it can get more people to log on, the rest will follow.
Many years ago, when I worked for a lifestyle magazine, I was given my worst assignment ever. I had to call some of the richest people in southern India and ask them what they usually had for breakfast. The first man I called told me, “I don’t eat gold biscuits.” It was a well-deserved reprimand for presuming that rich people were somehow different from other humans.
It is equally ridiculous to presume that what poor people want from the Internet is lessons in plumbing.
Manu Joseph is the editor of OPEN magazine and the author of the novel “The Illicit Happiness of Other People.”